Larson in Nigeria
To: Mr. Larson From: Krutika Date: 5 September, 2012
Subject: Detailed analysis report to determine the course of action for Larson Inc.’s Nigerian operations. This report provides information on the macroeconomic conditions prevailing in Nigeria apart from taking into consideration the report given by the CEO-Nigeria operations. With this the report attempts to evaluate the economic viability of the business in Nigeria in a long run.
Executive Summary
The Nigerian wing of Larson Inc. finds it hard to operate efficiently owing to the changing policies of the local government; the issues related to cash flow, expatriate work force, unions, corruption, tax policies, red tape and scarcity of local skilled man. In this wake, the CEONigerian operations understands it to be rational to divest from Nigeria. However, considering the future opportunities that would emerge in Nigeria and in countries around, it is recommended to continue business, expand and tap potential markets by entering into alliances with local partners to evolve as a major cable manufacturer and service provider.
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Larson in Nigeria
Page 1
Situational Analysis
Along with the CEO’s report, to evaluate the future of JV it becomes significant to understand the geopolitical scenario prevailing in Nigeria. Demographic dividend With decreasing total fertility rate, falling birth rate and dependency ratio less than 1 (or working age: dependent population= 1.13), Nigeria is in demographic window. (Annexure: 1) GDP Between 1999-2003, the % GDP- real growth rate is positive which averaged 4.2% a year, up from 3.5% over the 1995-98 period. (Annexure: 2) - Investment Gross fixed investment (private and public) increased by 6.7% on average over 2000-03. - Foreign direct investment (FDI) inflows increased from US$1.0 billion in 1999 to US$2.0 billion in 2003. Reforms The Trade Policy Review include deregulation in electricity and telecommunication sectors; privatization of
Subject: Detailed analysis report to determine the course of action for Larson Inc.’s Nigerian operations. This report provides information on the macroeconomic conditions prevailing in Nigeria apart from taking into consideration the report given by the CEO-Nigeria operations. With this the report attempts to evaluate the economic viability of the business in Nigeria in a long run.
Executive Summary
The Nigerian wing of Larson Inc. finds it hard to operate efficiently owing to the changing policies of the local government; the issues related to cash flow, expatriate work force, unions, corruption, tax policies, red tape and scarcity of local skilled man. In this wake, the CEONigerian operations understands it to be rational to divest from Nigeria. However, considering the future opportunities that would emerge in Nigeria and in countries around, it is recommended to continue business, expand and tap potential markets by entering into alliances with local partners to evolve as a major cable manufacturer and service provider.
[Word count - 99]
Larson in Nigeria
Page 1
Situational Analysis
Along with the CEO’s report, to evaluate the future of JV it becomes significant to understand the geopolitical scenario prevailing in Nigeria. Demographic dividend With decreasing total fertility rate, falling birth rate and dependency ratio less than 1 (or working age: dependent population= 1.13), Nigeria is in demographic window. (Annexure: 1) GDP Between 1999-2003, the % GDP- real growth rate is positive which averaged 4.2% a year, up from 3.5% over the 1995-98 period. (Annexure: 2) - Investment Gross fixed investment (private and public) increased by 6.7% on average over 2000-03. - Foreign direct investment (FDI) inflows increased from US$1.0 billion in 1999 to US$2.0 billion in 2003. Reforms The Trade Policy Review include deregulation in electricity and telecommunication sectors; privatization of
References: 1.) http://www.indexmundi.com/g/g.aspx?v=71&c=ni&l=en 2.) http://pdf.usaid.gov/pdf_docs/Pnacx579.pdf 3.) http://www.nationsencyclopedia.com/Africa/Nigeria-POPULATION.html#b 4.) Reports on NEEDS, MDP and Trade Review Policy (2003), Nigeria. Larson in Nigeria Page 12